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Maine Bureau of Consumer Credit Protection

The Maine Bureau of Consumer Credit Protection was established in 1975 to enforce a wide

variety of consumer financial protection laws, including:

The Bureau conducts periodic examinations of creditors to determine compliance with these laws;

responds to consumer complaints and inquiries; and operates the state’s foreclosure prevention

hotline and housing counselor referral program. The Bureau also conducts educational seminars

and provides speakers to advise consumers and creditors of their legal rights and responsibilities.

William N. Lund

Superintendent

December 2014

DOWNEASTER COMMON SENSE GUIDE: CREDIT REPORTS AND CREDIT SCORES

By David Leach, MPA and Abigail Pratico Editing and Production Assistance by Steven Lemieux, MBA

Cover Image by Edward Myslik & Steven Lemieux, MBA Copyright © 2014 Bureau of Consumer Credit Protection, State of Maine

The contents of this book may be reprinted, with attribution. Second Printing | July 2015

Maine residents can obtain additional free copies of this booklet by contacting the Bureau of

Consumer Credit Protection at 207-624-8527 or toll-free at 1-800-332-8529. Non-Maine residents

may purchase the publication for $6 per copy, or at a volume discount of $4 per copy on orders of

50 or more. Shipping fees are included in the prices listed.

Toll-free Maine Consumer Assistance

1-800-332-8529 (1-800-DEBT-LAW)

TTY users call Maine relay 711

Maine Foreclosure Prevention Hotline

1-888-NO-4-CLŌZ

(1-888-664-2569)

www.Credit.Maine.gov

-Consumer Credit Code

-Truth-in-Lending Act

-Fair Credit Billing Act

-Truth-in-Leasing Act

-Fair Credit Reporting Act

-Fair Debt Collection Practices Act

-“Plain Language” Contract Law

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Dear Maine Consumers,

This State of Maine publication presents “must know” information on consumer credit reports and

credit scores. Creditors, insurance companies, banks, employers and landlords routinely use credit

report information when they make decisions on loan approval or denial, insurance premium costs,

hiring decisions and approval for housing. This guide describes the basic facts of credit bureau

reports and credit scores: how they work, steps for obtaining copies of your reports, how you can

challenge inaccurate items, and strategies to ensure that your credit report and score present the

most accurate representation of your credit-worthiness.

As authors of this guide, we hope to expand your knowledge of how credit reports and credit

scores work, and to empower you to quickly and efficiently correct errors and omissions in your

reports!

David Leach, MPA Principal Consumer Credit Examiner

Abigail Pratico Margaret Chase Smith Summer Intern, 2014

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Table of Contents Part 1: Credit Reports and Credit Scores 1

• Credit Reporting Agencies

• Tradelines

• FICO Credit Score

Part 2: Ordering and Reviewing Your Credit Report 6

• Fair Credit Reporting Act Rights

• How to Order Your Credit Report

• Correcting Your Credit Reports

• Frivolous Requests

Part 3: Scams and Identity Theft 10

• Credit Repair Scams

• Identity Theft

• Credit Monitoring

Glossary and Resources 12

• Glossary of Common Terms Found on Credit Reports

• Sample Forms (File Freeze and Free Annual Credit Report Request)

• Publications

• Consumer Resources

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A credit report is like an academic transcript;,

but rather than listing course grades it lists a

person’s debts. Lenders believe the best

indicator of future loan performance is past

loan performance. Credit reports show a

person’s financial reliability. They allow

potential creditors to assess the fiscal risk

presented by doing business with a person.

Credit reporting agencies (a.k.a. credit

bureaus)—for-profit companies that specialize

in compiling data for use by creditors and

other authorized users—produce credit

reports. There are three major credit bureaus in

the United States: Experian, TransUnion and

Equifax. The data collected on a credit report

is voluntarily reported by a person’s creditors.

Credit bureaus compete with each other to

compile the most comprehensive and accurate

information possible. Businesses that need to

see consumers’ credit reports (e.g., mortgage

companies, landlords or auto dealers) pay

credit bureaus for access to that information.

Credit bureaus that consistently offer the most

complete and accurate files to creditors attract

more business. Because of this, a credit bureau

rarely shares information with another credit

bureau. As such, credit reports produced by

different companies often contain slightly

different information.

Tradelines

A credit report contains seven to ten years’

worth of information, presented in the form of

tradelines — records of a person’s current

and past monetary obligations. Individual

tradelines may include the names of companies

a consumer has (or had) account with, the

dates accounts were opened, credit limits, types

of accounts, balances owed and payment

histories. Auto loans, credit cards and

mortgages are all common types of tradelines.

Your credit report will show most if not all

your accounts—open or closed. Most

tradelines, positive or negative, remain on a

person’s credit report for up to seven years.

Lenders like to see positive tradelines on

credit reports—tradelines showing consistent

on-time repayment of debt. Many credit

reports also include negative tradelines.

Negative tradelines may make potential

creditors hesitant to lend to you and may affect

your ability to get a job or rent an apartment.

Common negative tradelines include:

• Repossessions: Repossessions and

deficiency balances are major negative

tradeline items that can severely affect a

person’s credit history. If money is still

owed to a creditor after a repossession has

occurred, the remaining balance may be

sent to collections. If so, a separate

Credit Reports and Credit Scores

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collection account may appear on the

borrower’s credit report.

• Foreclosures: A foreclosure is one of the

harshest trade lines that can appear in a

credit report. Foreclosure-related tradelines

may cause a consumer’s credit score to

drop by as much as 300 points.

• Bankruptcies: Filing for bankruptcy can

help consumers to discharge overwhelming

unsecured debt, but can also make it

difficult to establish new credit.

Bankruptcies can remain on a credit report

for up to 10 years. Tradelines affected by a

bankruptcy will remain on your credit

report with a status of “included in

bankruptcy.”

• Tax Liens: A tax lien occurs when the

local, county, state, or federal government

claims ownership interest in a person’s

property (e.g., land or other possessions),

salary or tax refund to secure money for

unpaid debts. If left unpaid, tax liens may

threaten ownership of your property. The

three big credit bureaus state they will

remove unpaid tax liens 15 years after their

filing date. Removal of unpaid tax liens is

not required by law. As such, unpaid tax

liens could (potentially) remain on a credit

report forever.

Credit Scores

Credit reports and credit scores are closely

related. Your credit score is an important tool

for understanding your financial obligations. It

also enhances your ability to borrow at the best

rates and terms available. Unlike credit reports,

which you can get for free once each year,

credit bureaus will charge you a fee for access

to your credit score. A credit score is a

numerical representation of a person’s financial

responsibility, calculated using the information

on their credit report.

The most widespread credit scoring model was

developed by Fair Isaac Corporation

(“FICO”). FICO scores range from 300 to

850. The higher the score, the greater a

borrower’s presumed creditworthiness. The

FICO model takes several different factors

into consideration when calculating a person’s

credit score, each of which is weighted

differently for different groups of people (i.e.,

an established homeowner’s information is

weighted differently than that of a recent high

school graduate). For most people:

• 35% of their FICO score represents

payment history.

• 30% represents amounts owed.

• 15% represents length of credit history.

• 10% represents new credit.

• 10% represents the types of credit used.

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Credit scores are a reliable way for lenders to

determine the risk of a borrower defaulting or

becoming delinquent. The lower the credit

score, the higher the risk to the lender (and the

higher the interest rate charged). Students

entering the workforce often begin adulthood

relatively low credit scores. Over time the

addition of positive trade lines raises their

scores, allowing easier access to financing.

Credit accounts usually feature a grace period

during which most creditors will not report a

borrower to the major credit reporting agencies

as being late on their payments. To improve

your credit score:

• Pay your loans on or before their due date

– set up payment reminders or automatic

payments to stay current;

• Keep your credit card balances at no more

than 1/3rd of the credit limit amount, 10%

or less if you can manage;

• Limit yourself to three or fewer credit

cards;

• Try to maintain your oldest credit card

accounts if the terms (e.g., APRs, annual

fees) of those accounts are favorable;

• Reduce debt (credit balances) on other

loans as much as possible; and

• Check your credit report at least annually

for any signs of identity theft, errors or

omissions

Co-signing

Consumers unable to qualify for loans on their

own are often told that they must find a co-

signer to act as a guarantor. Co-signers

undergo the same underwriting review process

as applicants, including a hard pull on their

credit report. If you are considering co-signing

on a loan, be cautious. If the primary borrower

fails to make payments, the creditor will hold

you responsible for the loan. The delinquency

will appear on your credit report, negatively

affecting your ability to get new credit.

Authorized Users

An authorized user is a someone who has been given permission to use a credit card. An

authorized user holds a credit card with theirs name on it, but is not legally responsible for repaying

the card’s balance.

Not all creditors report authorized user accounts to credit bureaus. If a creditor does report these

accounts, it can affect the user’s credit score. Since authorized users are not legally responsible for

an account, credit bureaus generally remove these tradelines if the account becomes delinquent. If

an authorized user account is not automatically removed from your credit report following a

delinquency, contact the lender or file a dispute with the credit bureau (see Correcting Your

Credit Reports, pg. 7).

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Opting Out: Stop or Reduce Pre-Approved Credit Offers

Under the Fair Credit Reporting Act (“FCRA”), you have the right to opt out of receiving

prescreened and preapproved credit and insurance offers permanently, or for five years. Opting out

will remove your name from lists supplied by the major consumer reporting agencies to businesses

that may perform soft pulls on your credit (see pg. 8).

To opt out of preapproved credit offer, visit www.OptOutPrescreen.com, or call 1-888-5-OPT-

OUT (1-888-567-8688). Be prepared to provide personal information, including your full name,

Social Security number, date of birth, and address. If you choose to opt out permanently, you will

need to confirm your request in writing by submitting a signed permanent opt out form, which will

be provided after submitting your online request.

Too Many Tradelines?

Some time ago, a recent college grad reported she was denied a loan for a car. She had “good

credit” and had earned an advanced degree from a prestigious university. The woman opened eight

credit card accounts, assuming the more accounts she had the better her chances for loan approval.

The cards were active, but had not been used.

The lender that reviewed her application noticed the woman’s lines of credit amounted to more

than $70,000 in potential debt. If she “maxed out” her cards, the debt could equal a medium-sized

mortgage!

The Bureau advised the woman to close out all but two or three of the oldest credit card accounts,

and to reduce the limits on the remaining cards to around $2,000. She was also advised to contact

the lender before doing so to see if closing the accounts would make a difference in approving her

application. A week later, the auto loan was approved!

“Too many people spend money they haven’t

earned, to buy things they don’t want, to impress

people they don’t like”

Will Rogers

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Under the Fair Credit Reporting Act

(FCRA), you can request one free credit report

from each of the three major credit bureaus

every 12 months. Consumers denied credit also

have the opportunity to order a copy of the

credit report utilized by the lender, for free, if

the lender based part of their decision on the

information contained in that report.

To access your free credit reports, you will

need to provide personal identification,

including your name, Social Security number,

date of birth and address. Our agency

recommends that you order a single credit

report from Experian, Equifax or TransUnion

once every four months, switching credit

bureaus each time. This interval will allow you

to keep a close eye on your credit reports and

tradelines, letting you catch errors, omissions

or other issues quickly, since major tradeline

errors or omissions will likely appear on credit

reports from all three companies.

Reviewing Your Credit Report

A credit report does not make for easy reading;

they are technical by nature and include codes

that require interpretation to be understood. A

key code is typically located on the first page of

your report, as well as a brief description of the

type of information contained in each field.

Refer to this key if you become confused while

examining your credit report. Credit bureaus

use similar codes, however the credit reports

supplied by each credit bureau are formatted

differently.

Some of the first information you will

encounter while looking over your credit

report is your personal information. Personal

information is used to identify and differentiate

you from other people who may share your

name. This information includes your name,

address, Social Security number, date of birth

and other information reported by creditors

and employers. You may also find a

Order by Phone:

1-877-322-8228

Order Online:

www.AnnualCreditReport.com

Order by Mail:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

(see pg. 17 for a request form)

To order your free annual credit report:

Ordering and Reviewing Your

Credit Report

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confirmation number or report number on

the first page of your credit report. Take

special note of it; you may need that number to

correct any errors you find on your report.

As you delve further into your credit report

you will begin to encounter tradelines - entries

supplied by a creditor to your report

describing your account status, payment

history and other details specific to the

account. Tradelines are usually arranged by

lender, in alphabetical order. Beneath the

current information about your account will be

a summary of that tradeline’s historical

information - a record of your payments (or

lack thereof) dating back up to seven years. Pay

close attention to the information recorded for

each tradeline. According to the Federal Trade

Commission (FTC), one in four consumers has

an error on their credit report that may affect

their credit score.

After the final tradeline, there will be a list of

“inquiries” - requests by persons or companies

who have recently checked your credit. Some,

but not all, inquiries have an effect on your

credit score.

Hard inquiries (“hard pulls”) can only occur

after you authorize them in writing such as

when you apply for credit by filling out an

application or authorization form. Hard

inquiries also occur if a business reviews your

credit, with your authorization, as part of a

transaction that may affect your finances, such

as renting an apartment or leasing a vehicle.

Each individual hard inquiry that occurs

without the extension of credit may lower your

credit score between one and five points.

Multiple hard pulls can occur if you shop

around for rates and terms on consumer loans

(e.g., auto loan) or mortgages. If credit is

extended within 30 days for a consumer loan

or 45 days for a mortgage loan, these hard pulls

• You have the right to be notified if

information in your file has been used to

increase cost to you, or deny you a benefit.

• You have the right to know what’s in your

file

• You have the right to dispute incorrect or

incomplete file information

• You can opt out of “pre-screened” offers

(see pg. 5)

• You may seek damages from violators of

your FCRA rights

• Consumer reporting agencies must correct

or delete inaccurate information upon

request

• Consumer agencies must not report

outdated, negative information

• Access to your file is limited to authorized

users to whom you have given permission

• You must give consent for reports to be

provided to employers

Your Fair Credit Reporting Act Rights

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will count as a single inquiry on your credit

report. If credit is not extended, your credit

score could be damaged. The algorithms used

to create credit scores treat each individual

credit inquiry without the extension of credit as

a declination by the lender. Some consumers

report having credit scores drop by 30 or more

points if credit is not extended after their loan

applications have been “shotgunned” (sent out

to several potential lenders at once).

Soft inquiries (“soft pulls”) are not

considered to be complete reviews of your

credit, but rather a peek at your credit score

and your personal profile. They may be

initiated by marketing companies that have an

existing relationship with a creditor with which

you have accounts, or businesses trying to find

potential customers for goods and services (e.g.,

preapproved credit cards or insurance). Soft

pulls do not have a negative impact on your

credit score.

Correcting Your Credit Reports

About one-quarter of all credit reports contain

at least one error. If you find errors on your

credit report, there are steps you can take to

resolve the issues. The Bureau of Consumer

Credit Protection enforces the federal and

Maine Fair Credit Reporting Act (FCRA) in

the state of Maine. The FCRA allows

consumers to challenge errors or omissions on

their credit reports, empowering consumers to

petition the major credit reporting agencies to

investigate claims of misreported tradelines,

failure to report credit accounts and other

issues.

To have a credit bureau begin an investigation

into errors on your credit report, you must file

a written request with the company. In

addition to noting the disputed or missing

tradelines you wish to have investigated, you

must include information needed to identify

yourself (full name, date of birth, Social

Security number, copy of your driver’s license,

and a copy of a utility bill containing your

street address). Be sure to sign your name

before submitting your request to the credit

bureau.

Within five days of receiving your request, the

credit bureau must send a notice to the

company whose tradelines you are disputing.

The credit bureau must investigate your claim

within 30 days, although it can extend the

investigation for up to 15 days beyond the

initial 30 if the investigation is ongoing.

Upon completion of its investigation, the

credit bureau will provide the results of the

investigation to you, as well as free copy of

your amended credit report (if the investigation

led to an update). At your request, the credit

Frivolous FCRA Requests

Some consumers have items on their credit reports which require investigation. The FCRA does

not allow you the right to challenge every trade line on your credit report as being inaccurate for

the purpose of overwhelming the credit bureau, causing the credit bureaus to miss their mandated

correction deadline. The exception to this “frivolous” rule is when identity theft occurs and there

may be dozens of incorrect fraud-related items, all of which must be investigated.

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bureau must send notices of credit report

corrections to anyone who received your

report in the last 6 months.

If your request for correction is a result of a

recent credit application where the error was

discovered, provide the creditor with a copy of

your amended credit report. That creditor may

then re-access your credit to validate the

change.

Telling Your Side of the Story

The results of an investigation into tradelines

on a credit report do not always change the

reporting of the items in question. The FCRA

allows a consumer to write up to a one

hundred-word explanation for a trade line that

remains in dispute, which will be attached to

the credit report. This provision provides

consumers the ability to explain the dispute, in

writing, in their own words.

While you can challenge items on your credit

report yourself for free, there are businesses

that will perform this service for a fee. The

Bureau recommends that consumers exercise

their FCRA rights themselves, at least initially,

by attempting to correct errors in their credit

reports. Our agency can also help Maine

consumers challenge any remaining items that

are in dispute, without cost.

“I’ve always advocated doing everything possible to pay off credit card balances. It’s good financial management, and the ticket to a strong

credit score”

Suze Orman

Non-Public Information

Every year, financial institutions send their clients written notices allowing consumers to opt out of

sharing consumers’ non-public information (NPI) with “non-affiliated third parties” who may seek

to purchase this information. NPI consists of data about that is not freely available to the public.

This information can be quite specific, including your full name, date of birth, Social Security

number, income level, account numbers, credit and debit card purchases or payment history on

loans. The Gramm-Leach-Bliley Act, enacted November 1999, mandates that all financial

institutions send this notice each year. Alternatively, some financial institutions may post privacy

notices online, so long as they include information on where to find the notice in regular

communications (e.g., billing statements), along with information on how to request a paper copy

of the notice.

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Unfortunately, the Internet is full of scammers

posing as legitimate credit repair organizations,

with two intentions: to steal the victim’s

identity through disclosure of personal

financial information and to take consumers’

money without providing any services. Victims

of debt relief and credit repair scams often lose

hundreds or thousands of dollars before

seeking help from authorities.

There are a number of credit repair agencies

licensed by the Bureau of Consumer Credit

Protection to work with Maine consumers to

amend their credit reports. If you need

assistance finding a legitimate credit repair

agency, contact the Bureau at 1-800-332-8529.

Identity Theft

The FBI estimates that 13.1 million U.S.

residents have their identities stolen every year,

for a combined annual loss of over $24 billion.

That means every year each of us has roughly a

1 in 24 chance of having our identity stolen.

Don’t take chances!

If you believe your identity has been stolen:

� Contact your financial institution(s) and

freeze, place a fraud alert or request closure

on any accounts that may be affected. If

you disclosed banking information to an

unknown caller, act immediately — every

second counts!

� File a report with law enforcement (local

police department, county sheriff, or the

Maine State Police). Be sure to keep a copy

of the police report — it’s important for

correcting your credit report and for

stopping debt collectors calling about debts

you don’t owe.

� Place a fraud alert on your credit reports

to tip off anyone who requests your credit

history that you may be a victim of fraud.

Part 3:

Scams and Identity Theft

How to Spot a Credit Repair Scam

The Credit Repair Organization Act (CROA) prohibits upfront or advance fees for credit repair

services. Legitimate licensed credit repair agencies will never ask for upfront or advance fees before

starting their services. Scammers, however, often demand immediate wire transfers, electronic

access to consumers’ bank accounts or bank or postal money orders to “get things started.” They

will also try to get consumers to disclose Social Security number, date of birth, full name, street

address, and bank account number and transit and routing number. Trust your instincts. If

something feels wrong, it probably is. If you think you’ve encountered an unlicensed or scam credit

repair company, contact the Bureau of Consumer Credit Protection at 1-800-332-8529.

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� Place file freezes on your credit reports. A

file freeze locks down your credit report,

preventing consumer reporting agencies

from releasing your information to a third

party without your authorization. As of

October 15, 2015, Maine consumers have

the right to place a free file freeze on their

credit reports at each of the three major

credit reporting agencies.

See pg. 15 for a file freeze form (or contact

the Maine Bureau of Consumer Credit

Protection at 1-800-332-8529).

� Contact the Federal Trade Commission’s

Identity Theft Hotline at 1-877-438-4338

(dial “0” to reach a live customer service

representative).

For more information on identity theft and

financial scams, order a free copy of the

Downeaster Common Sense Guide: Gone

Phishing — Identifying and Avoiding

Consumer Scams by contacting the Bureau at 1

-800-332-8529, or ordering though our website

at www.maine.gov/pfr/consumercredit/

publications.htm.

Identity Theft Protection and Credit

Monitoring Services

Many businesses offer identity theft protection

and credit monitoring services. If you chose to

have a business monitor your credit, you will

be notified of irregularities in your accounts

and, in some cases, be provided with continual

credit report access, identity theft insurance

coverage and/or other services – for a fee.

When making your decision, remember that

FCRA allows you free access to your reports

from each of the major credit reporting

agencies (Experian, Equifax, Trans Union)

once every 12 months (see pg. 6), allowing you

to monitor your credit at no cost. Additionally,

the Truth in Lending Act limits your liability

on credit card loss or theft to $50 per card, and

most card issuers will charge you nothing for

unauthorized charges if you are the victim of

loss or theft due to fraud, identity theft, or

most other criminal acts. If you suspect that

there are unauthorized charges on your credit

card, notify your credit card issuer

immediately.

The three major credit reporting agencies (Equifax, Trans Union, Experian) have divisions that

investigate allegations of identity theft and fraud.

Equifax Information Services

P.O. Box 105069

Atlanta, GA 30348

1-800-525-6285

https://www.ai.equifax.com/

CreditInvestigation

Experian

P.O. Box 4500

Allen, TX 75013

1-888-397-3742

www.experian.com/fraud

TransUnion LLC

P.O. Box 2000

Chester, PA 19016

1-800-680-7289

fraud.transunion.com

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“No Man’s Credit is ever as good as his money.”

-E.W. Howe

Maine’s New File Freeze Law

As of October 15, 2015, Maine consumers have the right to place free file freezes on their credit

reports with each of the three major credit reporting agencies: Equifax, Experian and TransUnion.

A file freeze may be placed by telephone, through the credit reporting agencies’ secure websites, or

in writing.

If you try to place a file freeze online or by phone, be prepared to provide personal information.

The credit reporting agency will need it to confirm your identity. When writing, ask the agency to

freeze your file under Maine’s new file freeze law. Make sure to provide the credit reporting agency

with your Social Security number, your date of birth, and your mailing and street addresses. Don't

forget to sign the letter!

The credit reporting agency will mail you a personal identification number (“PIN”). The credit

reporting agency will provide instructions for lifting the security freeze with your PIN. Save your

PIN - you will need it to remove the file freeze. Your file freeze will remain active until you tell the

credit reporting agency to lift it. Under Maine law, there is no fee for freezing or unfreezing your

credit file.

Equifax

PO Box 105069

Atlanta, GA 30348

1-800-349-9960

www.freeze.equifax.com

Experian

PO Box 4500

Allen, TX 75013

1-888-397-3742

www.experian.com/freeze

TransUnion

PO Box 2000

Chester, PA 19016

1-888-909-8872

www.transunion.com/freeze

To place your free file freeze, contact:

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Account Closed by Consumer: Frequently

associated with credit card accounts, reflects an

action taken by the consumer cardholder to

pay off then close their credit card account.

Account in Good Standing: The trade line/

credit account is active and is being paid “as

agreed” or current / on-time.

Account Number: The account number as

reported by the creditor.

Actual Payment Amount: The amount the

consumer last paid on this trade line account.

Amount Past Due: The delinquent amount,

expressed in dollars, as of the last date of

reporting.

Balance Amount: The total amount owed on

that trade line account at the date of the last

reporting period.

Bankruptcy: A legal status of a person who

has applied to federal court to discharge debts

they cannot pay.

Charge-off: Frequently associated with credit

card accounts, the original lender/creditor has

given up trying to collect this debt, and has

taken a loss by charging this account off their

“books”. Charge-off amounts are still owed,

and are frequently sold to debt buyers or debt

collectors.

Civil Action: A court action against a

consumer.

Collection Account: Loans, utility bills, or

medical bills that have been written/charged

off by the original creditor or company, and

referred to a third-party debt collector.

Credit Limit: Typically associated with a

credit card or home equity line of credit, the

highest balance allowed by the creditor.

Creditor Class: The type of company (bank,

credit union, IRS, etc.) reporting the trade line

account.

Current (Account) Status: Whether the trade

line/credit account is open, closed, in

collection, or in charge-off status.

Date of First Delinquency: The date this

account was first reporting as being delinquent.

Date of Major Delinquency: The first date

this account reported a major delinquency (60

or more days late)

Date Opened/Closed: The date the credit

account was established or terminated.

Default: A loan or mortgage is in default when

a consumer has failed to make payments when

due, but the account has not yet been sent to

collections.

Glossary of Common Terms

Found on Credit Reports

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Deferred Payment Date: When a lender

agrees to let the consumer make a payment

(mortgage, auto, credit card) after the standard

payment deadline date.

Deficiency Balance: After a vehicle or other

collateral is repossessed and sold, the negative

balance which exists if the sale price of the

collateral (at auction) is not sufficiently large

enough to pay off the loan’s balance, plus all

the repossession fees (towing, storage, and

auctioneer’s fees).

Discharge: Often associated with bankruptcy,

a court action excusing a consumer from

additional payments on a debt.

Dismissed: When the federal courts do not

allow the consumer to continue with his or her

bankruptcy petition.

Foreclosure: The legal process required for

the lender to take ownership of a home

pledged as collateral on a residential mortgage

loan.

Generation Identifier: Jr., Sr., II, III, etc.

High Credit: The highest amount charged or

borrowed.

Inquiry (Hard Pull): When an authorized

creditor (e.g., after you sign on a loan

application) accesses your credit history. Each

“hard pull” results in an approximate 2-point

deduction of your credit score – for a limited

period of time.

Inquiry (Soft Pull): When a creditor reviews

your credit history in order to offer you a pre-

screened offer (credit card / instant loan

check) that you have not ordered. Soft pull

inquiries have no positive or negative effect on

your credit scores.

Installment Loan: Unlike revolving loans, an

installment loan (mortgage or auto loan, for

example) has a fixed term (12, 24, 36, 48

months or more) and (if the interest rate is

fixed, not variable) a fixed monthly payment.

Judgment: A court decision against a debtor.

Last Reported: The last month or year the

creditor on a trade line/account sent data to

the credit reporting agency.

Lien: A legal claim filed against a property

owned by a consumer for failure to repay a

loan or tax obligation. After judgment in court,

some credit card lenders place liens on

consumers’ homes or vehicles – requiring

moneys from the sale of a home or car be

applied to the outstanding debt before the new

owner of the home or vehicle can assume legal

title or ownership of that item. Liens also

commonly result from an unpaid federal, state,

or municipal tax obligations.

Months Reviewed: The time period an

account/trade line has been reported to a

credit bureau agency.

Original amount: The original balance of the

credit extension. Generally associated with

installment loans (auto, home, or personal).

“Paid as Agreed”: The borrower made (or is

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making) all their loan payments on or before

the due dates.

“Paid Less Than Full Amount”: A formerly

over-due loan account (credit card, car loan)

whose final balance was “settled” for less than

the full amount owed. Potential lenders who

find these items on a credit report consider this

to be a negative factor.

“Paid in Full”: The trade line/loan account

has a $0 balance.

Payment Status: How the trade line or loan

account is being paid back – on time, or late.

REPO: Repossession (voluntary – you turn in

the vehicle, or involuntary – the lender or

repossession agent acquires it). A “repo” trade

line remains on a consumer’s credit history for

up to 7 years.

Reported Since: The original date the account

started reporting to the credit bureau/credit

reporting agency.

Revolving: An open-end loan (revolving) plan

such as a credit card or a home equity line of

credit. The consumer draws down on a line

amount, and makes open-end (non-

installment) payments on the amount

outstanding, plus finance charges. Revolving

loans have no end date.

Satisfied: A court ordered payment on a debt

which has been paid off by the consumer in an

amount that is deemed to be acceptable.

Scheduled Payment Amount: The minimum

amount last requested for payment.

Security Alert: Consumers, who believe their

identities may have been stolen due to a recent

scam or file-breach, may initiate a “security” or

“fraud” alert with the major credit reporting

agencies. This notation will appear on their file.

Status: The repayment condition of the

account.

Term Duration: The total number of

payments on an installment loan.

Utilization Rate: The percentage of a credit

available to a consumer that he or she has

used. Utilization rate is an important factor in a

person’s credit score. An ideal utilization rate

for most consumers is generally 10% or lower.

Vacated: A civil court judgment that is voided.

Wage Garnishment: A court action directing

the consumer debtor’s employer to set aside a

percentage of his or her wages to satisfy a

judgment on a delinquent debt.

Writ of Replevin: Court ordered repossession

of an item offered by the borrower as security

on a loan.

“It is thrifty to prepare

today for the wants of

tomorrow”

-Aesop

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Publications

Be sure to check out other free booklets from the

Bureau of Consumer Credit Protection:

Downeaster Common Sense Guide: Debt Collection – If you are past due on

your credit card, mortgage loan, auto loan or student loan, this is the FREE booklet

for you! Learn about your rights in a consumer debt collection action, and how to

deal with collectors. This booklet also provides guidance in spotting prevalent debt

collection scams and contains ample “cease contact” and “debt validation” letters.

Downeaster Common Sense Guide: Automobile Buying and Financing –

From calculating “how much vehicle” you can afford, to vehicle research, shopping

for the best APR and deciding on the best loan term for your needs, this booklet is a

comprehensive guide to purchasing and financing a vehicle.

Downeaster Common Sense Guide: Gone Phishing – Identifying and

Avoiding Consumer Scams – This guide is all about helping consumers defend

themselves against being scammed. It details tactics and hooks used by scammers,

offers advice to consumers so they can protect themselves, and explains how to

report the scams to authorities.

Downeaster Common Sense Guide: Credit Reports and Credit Scores – Learn

the basics of credit, gain insight into how credit reporting and scoring work, and

discover the impact your credit has on your ability to borrow with this publication

from the Bureau of Consumer Credit Protection.

Downeaster Common Sense Guide Finding, Buying and Keeping Your Maine

Home – This guide is a resource for first time homebuyers, and provides an

overview of the mortgage lending process, types of mortgage lenders and loans, and

other related topics.

Downeaster Common Sense Guide to Student Loans — A comprehensive guide

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for the prospective college student on the world of educational loans. This book

covers loan types, the FAFSA process, how to apply for scholarships and grants, and

the rights of a student debtor in the repayment/collection process.

Downeaster Guide to Elder Financial Protection – This booklet arms seniors

with information to protect their finances in the 21st Century. It includes tips on

spotting and stopping elder financial abuse and exploitation, in addition to

information on registering for the Do-No-Call List, the Do-Not-Mail List and the

credit card (mailing) Opt-Out List. The Downeaster Guide to Elder Financial

Protection also features a resource page containing contact information for “must

know” consumer protection agencies in both Maine State and federal government.

These guides are free to Maine residents. Out-of-state orders are $6.00 each, or at a

volume discount of $4.00/copy on orders of 50 or more (shipping included).

To order, call 1-800-332-8529 (in-state) or 1-207-624-8527 (outside of Maine).

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Consumer Protection Resources

Maine Bureau of Consumer Credit Protection

1-800-332-8529

TTY Maine Relay 711

Maine Bureau of Insurance 1-800-300-5000

TTY Maine Relay 711

Maine Bureau of Financial Institutions 1-800-965-5235

TTY Maine Relay 711

Maine Office of Aging and Disability Services 1-800-262-2232

TTY Maine Relay 711

Maine Office of the Attorney General (Consumer Hotline) 1-800-436-2131

TTY 1-207-626-8865

Maine Office of Professional and Occupational Regulation 1-207-624-8603

TTY Maine Relay 711

Maine Office of Securities 1-877-624-8551

TTY Maine Relay 711

Maine Public Utilities Commission (Consumer Assistance Division) 1-800-452-4699

TTY 1-800-437-1220

Maine Real Estate Commission 1-207-624-8524

TTY Maine Relay 711

Consumer Financial Protection Bureau (CFPB) (Federal) 1-855-411-2372

TTY 1-202-435-9742

Federal Reserve Consumer Hotline 1-888-851-1920

Federal Trade Commission Consumer Response Center 1-877-382-4357

Federal Trade Commission ID Theft Hotline

(after dialing, press “0” to reach a live operator)

1-877-438-4338

Internet Crime Complaint Center (IC3) www.ic3.gov

National Credit Union Administration (NCUA) 1-800-755-1030

U.S. Postal Inspection Office (Ask for the Portland, Maine Field Office) 1-877-876-2455

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NOTES

This book is not intended to be a complete discussion of all statutes applicable to consumer credit. If you require

further information, consider contacting our agency or an attorney for additional help.

3rd Printing | 2016

Copyright ©2015 | The State of Maine Bureau of Consumer Credit Protection

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Bureau of Consumer Credit Protection

35 State House Station

Augusta, ME 04333-0035

www.Credit.Maine.gov